Course Syllabus

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Economics of Global Monetary Policies and Capital Flows

 

Semester & Location:

Spring 2024 - DIS Stockholm

Type & Credits:

Elective course - 3 credits

Major Disciplines:

Economics

Prerequisite(s):

One course in intermediate or advanced macroeconomics at university level

Faculty Member:

Greger Wahlstedt  (current students please use the Canvas Inbox) 

Academic Support:

academics@disstockholm.se 

Time & Place:

Tuesday & Fridays, 11:40 - 13:00 Room: 1C-505

Course Description

The 2007 financial crisis has in many ways been a wake-up call for economists. The global nature of the crisis has highlighted the 21st-century economy’s unprecedented global interdependence - and its accompanying vulnerability to international pressure on money markets and capital. This course explores a variety of economic accounts of how different money markets, monetary policies, foreign exchange, and capital interact in the global economy, relating these to current debates, in Europe and beyond, on how best to regulate and coordinate the world’s financial systems. We will analyze policy responses, how capital markets and money markets are tightly intertwined, international regulatory cooperation, and the impact of derivative finance, and reflect on macroeconomic policies.

 

Learning objectives

By the end of this course, you will be able to ...

  • Understand and reflect on the role of money and credit in different societies at different periods in history
  • Analyze monetary policy and its economic impact
  • Understand the role of the financial sector and shadow banking in an economy and understand the regulation of the financial sector
  • Understand and analyze the interdependence between monetary institutions and the financial and banking sector
  • Apply relevant micro and macro-economic theories and models to synthesize the main and diverse elements making up the globalization of finance and current economic policies
  • Analyze and reflect on how modern monetary policies and expansion of central bank’s balance sheets impact financial flows, currencies, and global economies
  • Assess the political consequences of monetary policies

Faculty

Greger sept 2022b.jpg

Greger Wahlstedt greger.wahlstedt@disstockholm.se  received an MBA in Finance from Manchester Business School and a CEFA (Certified European Financial Analyst) from the Stockholm School of Economics. Greger has been working for more than 35 years in the financial markets. He has a solid experience as head of large asset management units; 14 years as head of Handelsbanken's fixed income fund management and asset allocation, as well as heading the investment division at the Swedish central bank (Riksbanken) in charge of the management of the gold and foreign exchange reserves. Originally, an economist, he has also worked as a quant analyst as well as senior sales in structured derivatives and Private Banking at Handelsbanken. He is an appreciated teacher in economics, bond markets, and interest rate products, among other things. Since 2010 he has also educated Investment advisors in finance, financial markets, and portfolio theory. Member of Swedish House of Finance at the Stockholm School of Economics and The Swedish Society of Financial Analysts (SFF). With DIS since 2017.

Readings

  • Articles and Harvard case studies.
  • Carl E. Walsh (2010). Monetary Theory and Policy, 3rd edition. The MIT Press, Cambridge, Massachusetts.
  • Marco Casiraghi and Leonardo Pio Perez (2022). Central Bank Communications. IMF Monetary Policy Frameworks
  • Frederic S. Mishkin (2012). Macroeconomics – Policy and Practice, 2nd edition. Pearson Education Limited.
  • Michael R. Solomon, Gary J. Bamossy, Sören Askegaard, Margaret K. Hogg (2016). Consumer Behaviour – A European Perspective, 6th edition. Pearson Education Limited.
  • N. Gregory Mankiw (2016). Macroeconomics, 9th edition. Worth Publishers, a Macmillan Higher Education Company.
  • Karl E. Case, Ray C. Fair, Sharon E. Oster (2017). Principles of Microeconomics, 12th edition. Pearson Education Limited.

Field Studies

  • Visiting the Parliament House 
  • Visiting the Swedish central bank, Riksbanken
  • These Field Studies can be changed quickly depending on the Riksbank's current workload. An alternative is to visit Vattenfall and meet Annika Ramsköld, who is responsible for their sustainability commitment.

Guest Lecturers 

  • Jan Häggström, former Senior Vice President, Head of Economic Research and Chief Economist at Svenska Handelsbanken AB (publ).
  • Michal Salamonik, Ph.D. (Department of History, Södertörn University, 2017). M.A. (History, specialization Scandinavian History, Nicolaus Copernicus University in Toruń, 2010).

Approach to Teaching

We will approach the topic in a very open and exploratory way. Reflection and critical thinking are key parts of the teaching.

Expectations of the Students

Readings or YouTube videos should be read/looked at before each lecture and key points noted by the student. During most lectures, various groups will be assigned to do a presentation on a topic. All students are expected to engage actively in discussions and analyses. It is the focus that students show the ability to apply the economic tools to the analysis as opposed to mere statements of points of view.

Evaluation

Students should show the ability to use economic tools to analyze topics, both in discussions and in their presentations in class. Students should also show openness and curiosity as to understand and reflect on the history and role of money and finance in society and economies around the world.

Grading

Assignment

Percent
Engaged participation

30%
Presentations in class

20%

 Assessments - Quiz and Final Paper

50%

A Word about Grades

We realize that grades are important to you, but try not to let your anxiety about grades deter you from taking intellectual risks and learning just for the joy of learning. Also, we do not grade to punish or reward you just as our grade is not an indication of our evaluation of you as a person. We grade you to give you our honest assessment of your academic performance at this point.

Note: To be eligible for a passing grade in this class you must complete all of the assigned work.

Engaged participation (30%)

  • Class participation requires arriving on time and being prepared concerning readings and other assignments. Your participation grade reflects the importance of being active in this course, which relies in great part on the reflections, discussions, and exercises in class. 

Presentations in class (20%)

  • During an interactive game, we will all act as members of the board of a central bank and decide/argue on changes in the key rate. During the semester, you will also get into the role of finance minister and propose fiscal measures in a fictional country Abcilleon. You will also read about monetary policy measures during one historical financial crisis, and present your conclusions about what happened and what was learned.

Quiz (10%)

  • During the term, there is only one quiz. With short questions, it sums up what we learned, but it also asks what you think will be the biggest difficulties for the central banks to pursue monetary policy in the future. Your answer is stated in free text.

Final Paper (40%)

  • You will choose one out of twelve predefined subjects, and write a Paper on your own, or with a buddy. Guideline: 750-1250 words if on your own, or 1000-1500 words if you are writing with a buddy. You will present your Paper in class in late April. It should be a 10-20 minutes presentation. Examples of subjects are:
  • Is there any risk that the stimulative monetary policy from the Riksbank (to boost inflation) will lead to a new financial crisis in Sweden (because the Housing bubble, if any, will burst)?
  • Is it possible for the Riksbank to set its repo rate independent from the ECB repo rate? If so, what would the implications be?
  • Too high inflation is no longer a problem, as it was 20 years ago. If central banks dropped their inflation target, what would a suitable new target for monetary policy be? And why?
  • New Keynesians assume that there is imperfect competition in price and wage setting to help explain why prices and wages can become "sticky", which means they do not adjust instantaneously to changes in economic conditions. What are the implications of “sticky” prices for Central banks looking at headline inflation to maintain price stability?

 

Academic Regulations  

Please make sure to read the Academic Regulations on the DIS website. There you will find regulations on: 

 

 DIS - Study Abroad in Scandinavia - www.DISabroad.org

Course Summary:

Date Details Due